S&P said it may also downgrade six other lenders. Santander, Spain’s biggest bank, had its long-term debt rating cut by two levels to A- from A+, and BBVA, the second-largest, had its rating cut to BBB+ from A, the ratings company said in a statement today. The outlook for those ratings is negative.

Spain’s economy shrank 0.3 percent in the first quarter from the fourth quarter, the National Statistics Institute said today. Spain’s sovereign rating was cut on April 26 for the second time this year by S&P, which cited concern that the country will have to provide further fiscal support to banks as the economy contracts.

Spain’s downgrade by two levels to BBB+ from A, with a negative outlook, has “direct negative rating implications” for the banks it rates at or above the sovereign rating, the ratings company said today.

“The factors behind the downgrade of Spain could have potentially negative implications for our view of the economic risk and the industry risk affecting the Spanish banking industry,” S&P said today.

Prime Minister Mariano Rajoy is struggling to convince investors his government can narrow Spain’s budget deficit by 3.2 percentage points of gross domestic product this year as the economy shrinks and unemployment approaches 25 percent.